According to a recent report by Business Insurance, Canadian insurers should brace for a coming surge in directors’ and officers’ liability claims. The rise in claims is an anticipated consequence of major changes in Canadian securities regulation dating back to 2005. It was then that the province of Ontario amended its securities law, known as Bill 198, to create civil liability for directors and officers in connection with inaccurate or incomplete corporate disclosures. Alberta and Manitoba have since followed suit, with similar changes under consideration in other provinces.

With stock markets on the rise in recent years, the ripple effect of these regulatory developments has been relatively limited. However, according to Business Insurance’s report, this will change once investors begin to realize losses. At greatest risk are companies whose stocks are traded exclusively on Canadian markets, typically with market capitalization of less than $100 million. In contrast, Canadian companies trading on U.S. markets have already been exposed to liability through U.S. regulatory reforms, most notably those implemented under Sarbanes-Oxley